Banking Explained

The only way to fix bad credit is to build good credit. The only way to build good credit is to get credit and use it responsibly. How can you do that when you have bad credit?

Regardless of your FICO score, you can still get a credit card. The catch is that you’re going to have to pay for the privilege of fixing your bad credit. You’re buying an opportunity to show lenders that you’ve become responsible. Using the new card prudently, you can raise your FICO score significantly within a few years, regardless of your previous credit history.

Credit reporting agencies and lenders give more weight to your recent payment habits than to your past credit history. The best credit cards for bad credit are not used for spending money or buying on credit. They’re merely tools you’ll use to fix a bad credit report.

Secured Credit Cards

The best credit cards for bad credit are secured cards. You’ll put down a deposit with the credit card company as collateral against your credit card balance. If you deposit $300 into a secured account, your credit limit will be $300, and you’ll be expected to pay your balances as with any card.

Most, but not all, secured cards charge fees in addition to requiring a deposit, but secured card fees can be considerably less than fees charged by unsecured cards. Annual fees, processing fees, or set-up fees may apply. Carefully review the terms and conditions to be clear on the charges.

The interest on your card will also be high, so you’ll want to pay your balances in full before the due date. Look for a secured card that gives you a repayment grace period before interest accrues, rather than one that charges interest from the date of a purchase.

Rebuilding Your Credit

All fees are billed to your account immediately. Paying off the fees before making purchases will begin the process of improving your credit score. Credit card companies report your repayment behavior monthly.

Use the card regularly, but only for purchases you already have the money to pay for. If you have $20 to spend on groceries, use your card to pay for them, and then put the cash aside to pay your bill. Better still, go online and pay the credit card company when you get home. Do this religiously and you’ll start to see your credit score improve. It won’t happen overnight, but it’ll happen.

As your credit score rises, you’ll be offered credit cards with better terms – you won’t have to use bad credit credit cards anymore. You can then close your secured card account and recoup your deposit and fix your bad credit.

An online bill pay service allows customers to pay for essentials like utilities, telephone and internet service, mortgages, and insurance all at once over the internet, eliminating the time-consuming and expensive process of paying each bill individually through the mail.  If you find yourself struggling to keep track of which bills you have paid and which you still owe, or you are just sick and tired of addressing envelopes by hand and licking stamps, online bill pay could be just the thing for you. Automatic bill pay can be set up one time to handle your regularly occurring payments to save even more time.

Paying bills online is fast, easy, and secure.

Fast:  A bill pay service allows you to centralize all your bills in one place.  After a one-time setup, where you enter the details of each individual bill you wish to pay online, paying your monthly bills will take no longer than a few clicks of a mouse.  Stamps, envelopes, and trips to the post office will be things of the past.

Easy:  Once your bill pay account is set up, what once took hour upon tedious hour will take only seconds!  Automatic bill paying can be set to debit your bank account for the amounts owed, allowing you to pay your bills without lifting a finger.  So long as you have sufficient funds in your account, you will never have to worry about forgetting to pay a bill ever again!

Secure:  You can choose to pay your bills online using a credit card, a bank account, even an online payment facilitator like PayPal!  Your personal information will be kept strictly confidential, protecting you from the threat of identity theft and allowing you to pay your bills online without a worry.

Thanks to automatic bill pay, you can pay your bills — your phone bill, your cable bill, your car insurance bill — any bill that allows you to pay online — from anywhere you can access the internet, even your internet-connected cell phone or PDA!  You will never have to stuff an envelope or peel a stamp again!

If you would like to know how to fix your credit score, then you will want to read on.  Specifically, we will be discussing what you need to do step by step for a credit score increase.  After reading this article, you should be ready to begin credit repair!

Review Your Report

The first step in the credit restoration process is to get a copy of your credit report and review it carefully.  You can get a copy of each of your three credit bureaus once a year at annualcreditreport.com.  If you have already received your free report this year, there are numerous other websites that will provide you your report for a small fee.  You can also get another free credit report if you have been recently been turned down for credit or employment due to your credit file.

Once you have your credit report, you will want to go somewhere quite and review your report.  Take a highlighter and make note of anything that is derogatory and anything that is inaccurate.

Make a Plan of Attack

• What to Look For

After you have reviewed your report, you will need to make a list of any accounts that you want to dispute with the credit bureaus.  Key things to dispute include:

Accounts with a late payment

Collection Accounts

Charge-Offs

Accounts that have had more than 7 years since the date of last activity

Credit Cards with the credit limit reporting too low

• Dispute 2-4 Items at A Time

Once you have your list, you will want to select a few items to dispute at a time.  Disputing everything at once can result in your disputes being discounted as being frivolous.  Try to select items that will have the most impact on your credit history to start with.

• Wait for Results then Repeat!

Creditors will have 30 days to respond to the credit bureaus regarding your dispute. You will be notified when your credit report has been updated.  You should wait another 30 days and then continue with your next round of disputes.  This is one one the best ways you can increase your credit score.